Category: Economy


Source: ZeroHedge.com

A week ago, when we reported on a move by the Dutch central bank that ordered a pension fund to forcibly reduce its gold holdings, we speculated that “this latest gold confiscation equivalent event is most certainly coming to a banana republic near you.” And while we got the Banana republic right, the event that we are about to describe is not necessarily identical. It is much worse. A bill proposed in the State of Washington (House Bill 1716), by representatives Asay, Hurst, Klippert, Pearson, and Miloscia, whose alleged purpose is to regulate secondhand gold dealers, seeks to capture “the name, date of birth, sex, height, weight, race, and address and telephone number of the person with whom the transaction is made” or said otherwise, of every purchaser of gold in the state of Washington. Furthermore, if passed, Bill 1716 will record “a complete description of the property pledged, bought, or consigned, including the brand name, serial number, model number or name, any initials or engraving, size, pattern, and color or stone or stones” and of course price. But the kicker: if a transaction is mode for an amount over $100, which means one tenth of an ounce of golds, also required will be a “signature, photo, and fingerprint of the person with whom the transaction is made.” In other words, very soon Washington state will know more about you than you know about yourself, if you dare to buy any gold object worth more than a C-note. How this proposal is supposed to protect consumers against vulture gold dealers we don’t quite get. Hopefully someone will explain it to us. We do, however, get how Americans will part with any and all privacy if they were to exchange fiat for physical. And in a police state like America, this will likely not be taken lightly, thereby killing the gold trade should the proposed Bill pass, and be adopted elsewhere.

While we are confident that representatives Asay, Hurst, Klippert, Pearson, and Miloscia have no clue why they are even proposing this bill, we would also be delighted to find out which moneyed interests they represent, and what happens to precious metal trading in America should Bill 1716 become a legal precedent which is effectively the first step before the final implementation of Executive Order 6102 version 2.

Read Full Bill…

Source: Financial Times

Brazil has warned that the world is on course for a full-blown “trade war” as it stepped up its rhetoric against exchange rate manipulation.

Guido Mantega, finance minister, told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, and would raise the issue of exchange-rate manipulation at the World Trade Organisation and other global bodies. He said the US and China were among the worst offenders.

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Source:Bloomberg

JPMorgan Chase & Co. cut a large position in the U.S. silver futures market, the Financial Times said, citing an unidentified person familiar with the matter. The decision was made to try to deflect public criticism of its dealings in silver, the FT said. The bank declined to comment on whether it had cut its position, according to the report.

Source: RawStory

VATICAN CITY – This is no ordinary bank: The ATMs are in Latin. Priests use a private entrance. A life-size portrait of Pope Benedict XVI hangs on the wall.

Nevertheless, the Institute for Religious Works is a bank, and it’s under harsh new scrutiny in a case involving money-laundering allegations that led police to seize euro23 million ($30 million) in Vatican assets in September. Critics say the case shows that the “Vatican Bank” has never shed its penchant for secrecy and scandal.

The Vatican calls the seizure of assets a “misunderstanding” and expresses optimism it will be quickly cleared up. But court documents show that prosecutors say the Vatican Bank deliberately flouted anti-laundering laws “with the aim of hiding the ownership, destination and origin of the capital.” The documents also reveal investigators’ suspicions that clergy may have acted as fronts for corrupt businessmen and Mafia.

The documents pinpoint two transactions that have not been reported: one in 2009 involving the use of a false name, and another in 2010 in which the Vatican Bank withdrew euro650,000 ($860,000) from an Italian bank account but ignored bank requests to disclose where the money was headed.

The new allegations of financial impropriety could not come at a worse time for the Vatican, already hit by revelations that it sheltered pedophile priests. The corruption probe has given new hope to Holocaust survivors who tried unsuccessfully to sue in the United States, alleging that Nazi loot was stored in the Vatican Bank.

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Source: ALLGOV

The U.S. Department of Justice has requested that a federal judge seal the courtroom of a trial involving computer code theft in order to protect trade secrets of Goldman Sachs.
Sergey Aleynikov was arrested by the FBI on charges of stealing computer code that supports Goldman’s high frequency trading system, which allows the bank to buy and sell stocks in a fraction of a second.
Goldman Sachs and others use “flash trading” to send out automated sell offers at higher and higher prices until one comes back with no buyer. The program then drops back to the highest acceptable price and sells at what the buyer set as his maximum limit. This allows Goldman to always obtain the best possible selling price, while the buyer loses the normal give and take of bargaining. In the case of large orders, such as those from pension funds or mutual funds, this can cost the buyers a small fortune.
Federal prosecutors have argued that the general public should not be allowed to observe the trial when details of Goldman’s trade secrets are discussed. They also asked that any documents related to Goldman’s trading strategies be sealed.
While it is common to protect proprietary corporate information during trials, the case of Aleynikov is unusual because it involves “secrets about a potentially lucrative trading system, rather than, say, ingredients in a soda formula,” wrote the Wall Street Journal.

Source: Time

Walmart has rolled back its rollbacks. Earlier this year, the retailer tried to spark sluggish U.S. sales by lowering its prices – already bargains – even further. One analyst called it “an initiative that screams: Price! Price! Price!” These rollbacks, as they are known in Walmartspeak and in the company’s advertising, were intended to overwhelm the shopper. In May, according to one shopping website, the price of a 40-oz. bottle of Heinz ketchup, which had been $2.42, was chopped to $1. Kraft mac and cheese, which had been going for $3.58, was reduced to $2.50. The rollback of a 50-oz. bottle of Tide laundry detergent, which was priced in the $7.48-$8.12 range, gave shoppers a $2.50 discount. Walmart expected a flood of customers to its stores, which would help lift the company’s stock out of its rut and get Walmart rolling again.

Instead, cutting prices depressed sales, as shoppers took the bargains and ran. For the quarter ending July 31, Walmart’s U.S. same-store sales fell 1.8%. The company’s same-store sales have now fallen for five straight quarters. Of the rollback strategy, Bill Simon, the president and CEO of Walmart U.S., told investors at a September conference, “It did not do what we had hoped it would do. It did, however, drive price perception. It did not drive sales or traffic.” As a result, Walmart rolled back the deeper discounts, and prices started inching upward this summer. According to a new report from J.P. Morgan, the price of a 31-item basket from a Walmart store in Virginia rose 2.7% in September alone. Walmart prices have jumped 5% since the start of the year and have been at their highest levels in the 21 months J.P. Morgan has tracked pricing data. (Read about Walmart’s March 2010 slump.)

While Walmart may have stopped giving away the store, that doesn’t mean customers will be facing sticker shock. “Walmart still stands for low prices,” says David Strasser, equity analyst at Janney Montgomery Scott. Of the five retail-store chains J.P. Morgan studied (Walmart, Kroger, Safeway, Whole Foods and Harris Teeter, a 192-store chain in the Southeast), Walmart still had the lowest prices. (The Walmart basket cost $95.75 in September; Kroger, at second lowest, came in at $101.93.) (See the first Walmart in TIME’s 50 authentic American experiences for 2009.)

Still, the move signals a shift in strategy. Since the rollbacks didn’t spur enough additional sales volume, Walmart needs to squeeze more revenues out of existing shoppers in order to satisfy analysts, institutional investors, shareholders and employees who are hungry for domestic growth. “Walmart is under unprecedented profit pressure,” says retail consultant Burt Flickinger III, managing director for Strategic Resources Group. Walmart stock, which traded at $53.57 as of the Oct. 4 market close, is essentially flat for the year and 15% off its high before the September 2008 market crash. With economic conditions not as dour as they were in late 2008 and early 2009, now could be a good time to pull off a price increase. (Comment on this story.)

The changes also reflect a shake-up in Walmart management. Under Project Impact, a strategy executed by former U.S. CEO Eduardo Castro-Wright, Walmart not only instituted more aggressive price-cutting but also moved to make its stores cleaner and better organized. Walmart’s so-called Action Alleys, the often cluttered thoroughfares laden with promotional deals, were streamlined. But in order to make the aisles more breathable, Walmart reduced the number of items offered in the stores by about 15%. (See the top 10 toy crazes.)

It turned out, however, that shoppers really liked the many brand choices, so they went elsewhere for variety. In March, Walmart began restoring 300 brands and package sizes. In late June, Castro-Wright was transferred to global sourcing, and Simon, the chief operating officer for Walmart U.S., took over as CEO. Under Simon’s direction, the price rollbacks were rescinded, even more items were stocked on the shelves and Action Alley was recluttered – though Simon insists the aisles will still be less cluttered than they were in the old days.

The company will meet with the investment community at its Bentonville, Ark., headquarters this week. There, executives might offer more hints about Walmart’s direction. Overseas expansion remains robust. International sales rose 11% last quarter, Walmart added almost 5 million sq. ft. (465,000 sq m) of overseas retail space during that period and the company plans to keep expanding outside the U.S. Things are looking up in places like Brazil and China. Now Walmart hopes to see if higher prices will prop up America.

Source: Bloomberg

Citigroup Inc. and Ally Financial Inc. units were sued by homeowners in Kentucky for allegedly conspiring with Mortgage Electronic Registration Systems Inc. to falsely foreclose on loans.

The lawsuit, filed as a civil-racketeering class action on behalf of all Kentucky homeowners facing foreclosure, also names as a defendant Reston, Virginia-based MERS, the company that handles mortgage transfers among member banks. The suit claims that through MERS the banks are foreclosing on homes even when they don’t hold titles to the properties.

“Defendants have filed foreclosures throughout the state of Kentucky and the United States of America knowing that they were not the ‘owners’ or beneficiaries of the loan they filed foreclosure upon,” the homeowners wrote in their complaint filed Sept. 28 in federal court in Louisville, Kentucky.

The homeowners claim the defendants filed or caused to be filed mortgages with forged signatures, filed foreclosure actions months before they acquired any legal interest in the properties and falsely claimed to own notes executed with mortgages.

The lawsuit is one of multiple cases against MERS and banks alleging that the process allows wrongful foreclosures. Several of these cases, combined in a multidistrict litigation in Phoenix, were dismissed Sept. 30, with the judge allowing the plaintiffs to re-file their complaints.

‘Inflammatory’

“The allegation is inflammatory and without merit and we intend to defend our position fully in a court of law,” Gina Proia, a spokeswoman for Ally, said in an e-mailed statement.

Mark Rodgers, a spokesman for Citigroup, declined to comment. Karmela Lejarde, a spokeswoman for MERS, didn’t have an immediate comment.

The Kentucky suit claims MERS and the banks violated the Racketeer Influenced and Corrupt Organizations Act, a law originally passed to pursue organized crime.

“RICO comes in because the fraud didn’t just happen piecemeal,” Heather Boone McKeever, a Lexington, Kentucky-based lawyer for the homeowners, said in a phone interview today. “This is organized crime by people in suits, but it is still organized crime. They created a very thorough plan.”

The suit, which includes claims of fraud, also names as defendants other banks, real-estate law firms and document- processing companies.

In the Phoenix litigation, U.S. District Judge James A. Teilborg found that the mortgage banks properly named MERS as the nominee for the original lenders and that the plaintiffs didn’t include enough detail in their allegations that the banks formed MERS to conspire to deprive homeowners of their property.

‘Straw Man’

Last year, the Kansas Supreme Court found that MERS’s relationship to the lenders is “akin to that of a straw man” and that it didn’t have rights over the mortgage at issue.

“Having a single front man, or nominee, for various financial institutions makes it difficult for mortgagors and other institutions to determine the identity of their lenders and mortgagees,” the Kansas court said.

The case is Foster v. Mortgage Electronic Registration Systems Inc., 10-cv-611, U.S. District Court, Western District of Kentucky (Louisville).

Source: CNN

Thousands of workers across France staged a one-day strike Tuesday to protest government plans to raise the retirement age.

More than 200 demonstrations were planned throughout the country Tuesday to coincide with the walkout.

Workers from both the public and private sectors were on strike, including those in transportation, education, justice, hospitals, media, and banking.

The strike, planned since June, is a reaction to government pension reforms aimed at raising the age of retirement to 62. The maximum retirement age is currently at 60, though some people in hardship posts may retire earlier, depending on the job.

More than a dozen unions and federations called for workers to strike Tuesday, though not everyone walked off the job. The Ministry of Education, for example, said only 30 percent of their sector is affected.

The strike also led to a reduction in train services.

President Nicolas Sarkozy’s planned reforms have angered many in France.

Among them is postal worker Isabelle Alouges, who has delivered the mail for 30 years. She had been planning to retire next year when she turns 55, but if the reforms become law, she may have to work until age 60 or beyond in order to earn a full pension.

An official from her union, PTT Sud, says postal workers feel betrayed because they are being made to pay by working longer when the government could fix France’s ballooning pension plan deficits by imposing more taxes on the rich.

“My feeling is one of unfairness because there is a bad sharing of national wealth,” Nicko Galapides told CNN. “That’s the thing — unfairness.”

Pension reform is likely to be a defining moment in Sarkozy’s presidency. There have already been repeated national strikes and demonstrations over the reforms and it has unified the opposition like no other previous issue.

One of Sarkozy’s top aides said over the weekend that while there is some flexibility on the details, the fundamentals of pension reform must be enacted, since increasing life expectancy increases the financial burden on the pension system.

Complicating things for the government are Sarkozy’s poor approval ratings, which over the summer hit the lowest point of his presidency.

“There is a kind of antipathy against Nicolas Sarkozy at the moment,” said Guillaume Petit, of the polling agency TNS Sofres. “His approval rating is very low. We have just 30 percent of French opinon trusting him as a president. This is very low for a president.”

Last month, polling agencies sent another political wakeup call when polls for the first time indicated that several French politicians could beat Sarkozy if he runs for re-election in 2012.

Source: New American

The Obama administration is “taking the first steps to confiscate retirement dollars,” according to Dr. Jerome Corsi who predicts that the end result will be retirees with 401(k) plans holding near-worthless government debt “that will be paid off in a devalued currency worth … pennies on the dollar.”

The move to confiscate those retirement dollars for government purposes was best illustrated by Christina Kirchner, President of Argentina, in 2008 when she announced plans to seize her citizens’ private pension funds. Writers at the Heritage Foundation said that while Kirchner claimed such seizure was necessary to protect her citizens’ investment accounts from the global meltdown, “most observers believe[d] her real motive [was] to use the $30 billion in seized assets to ease the massive debt obligations her leftist spendthrift government [had] run up.” The Wall Street Journal agreed, saying that “taking over the … pension fund assets [would] ease the cash crunch faced by [her] government.”

Corsi said he has a letter from the Treasury Department, Bureau of Public Debt, informing U.S. citizens that the federal government is rolling out a new program called “Treasury Direct” that will allow citizens “to purchase, manage, and redeem…savings bonds” electronically, as well as offering an option to purchase such bonds automatically through payroll savings or a personal checking account. This happened to coincide nicely, according to Corsi, with a bill offered by Senator John Kerry (D-Mass.) to create “Automatic IRAs” that would require all employers and employees to invest in IRAs using that automatic deduction option, “whether they want to do so or not.”

And this happened to coincide also with a program being pushed by the Service Employees International Union (SEIU) called “Retirement USA” which would create a government-forced retirement program with assets being directed into special Treasury Retirement Bonds, or R-Bonds. “Retirement USA” is promoting the idea that all workers have a “right” to a government retirement account, in addition to Social Security and any private pension plans those workers already have in place. Others behind “Retirement USA” also support more government dependency for workers, including the AFL-CIO, the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare and the Pension Rights Center.

All of this is being promoted by the idea that individual citizens aren’t saving enough for their retirement, and that consequently government has to “do something.” Rep. Jim McDermott (D-Wash., above photo), Chairman of the House Ways and Mean’s Committee’ Subcommittee on Income Security and Family Support, is confused about whose money is in those 401(k) plans: the individual contributor, or the government. He said that “since the savings rate isn’t going up for the investment [Congress is making] of $80 billion [in 401(k) tax savings], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

The world view of Rep. McDermott is revealing, and brings clarity to the point of view of many in the Washington establishment that the $4.5 trillion currently invested in 401(k) plans and other private pension plans that enjoy tax breaks actually belong to the government, and that when Congress loses $80 billion that would otherwise flow to Washington due to those tax breaks, it’s an “investment” that must “generate what we say it should”, or else it must be replaced with something else that works better.

The real “story behind the story” was revealed by Joe Wolverton here when he said,

…since the day of his inauguration, Barack Obama and his congressional co-conspirators have consistently and unapologetically set out to systematically nationalize the economy of the United States: first the banks; then the insurance companies; then the auto industry; then healthcare; and now the piece de resistance, the private savings accounts of millions of middle-class Americans.

But, thanks to the SEIU and their program “Retirement USA,” it’s all dressed up to look like a good deal for unsuspecting owners of retirement plans. In “Making the Case for a New System” they take the view that “A secure retirement is part of the American dream. Yet our retirement system is failing many Americans. Social Security is the cornerstone of our system, but as currently structured, is not meant to be our only retirement program. Pensions and savings plans are supposed to fill the gap, but too many workers don’t have plans, and too many plans don’t do the job.” They complain that:

Private retirement plan coverage is not UNIVERSAL…

For millions of Americans, private retirement benefits are not SECURE…

And Private retirement benefits are not ADEQUATE…

And, continues “Retirement USA”’s website, “Social Security must be preserved and strengthened… [and] we must encourage employers to offer and maintain them.”[emphasis added]

Underlying all of this is, of course, the statist presumption that government knows best what’s good for the citizens, and when the citizens’ behavior fails to meet government expectations, then mandates and force must be used to do for those citizens what the government thinks is best.

And the fact that Washington is looking at annual trillion-dollar deficits “for as far as the eye can see,” that $4.5 trillion of private monies is just too tempting to ignore.

Source: MyFoxPhilly

Philadelphia has become a target online now that people are learning that bloggers have to pay a fee just like businesses do.

Should the city really be going after the little guys for making money online? The mayor says yes.

The city’s recent tax amnesty program brought to light Philadelphia bloggers and others who had reported income to the IRS – meaning they were telling Uncle Sam they had made money – but had never purchased the business privilege license required to do business in the city. That license runs $50 a year or $300 for life.

That prompted the city to say it’s time to pay up!

The complaints come in two broad categories. The first is that this is an assault on what used to be “free speech.”

And the second is that this is cash-strapped big government going after the smallest of the small fries.

Obviously, most bloggers make very little money with their postings.

Aaron proctor is a Libertarian and part-time blogger who began writing for Examiner.com back in April. The site includes paid advertising.

Proctor said he fully expects a letter from the city, demanding that he buy that business license.

The Internet is buzzing with outrage. One site out of San Francisco described the move to charge bloggers who make money online as a “ridiculous action,” and elsewhere as “foolish.”

Mayor Michael Nutter defended the policy when asked about it Tuesday.

“If you’re paying taxes to the federal government, you should be paying taxes to the city of Philadelphia,” Nutter asserted. “Whether you’re blogging or manufacturing or catering or whatever it is you’re doing. This is about business. If you are in business, making money, then you should operate in accordance with every other business in the city of Philadelphia, and get a Business Privilege License.”

The mayor added, “If we had exceptions based on certain types of business, I think if you are a manufacturer, if you are a retailer, if you’re someone who is playing by the rules, making money, paying taxes and all of the sudden we’re not requiring the same of all businesses across the board, you would be standing here, Bruce, asking me, why is the city not enforcing its own regulations with regard to people filing taxes with the feds, paying their federal taxes, and not paying them to the city.”

A spokesman for the administration points out that the bloggers appeared on their radar screen by identifying themselves as businesspeople on those IRS forms. Doing so helped them get some federal tax breaks for business expenses.

Now, says that spokesman, some of these same folks want to claim blogging is a “hobby.”

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